Step 2: Select The Right Loan Program

Home loans come in many shapes and sizes. Deciding which loan makes the most sense for your financial situation and goals means understanding the benefits of each.  Whether you are buying a home or refinancing, there are 2 basic types of home loans. Each has different reasons you'd choose them.

1) Fixed Rate Mortgage

Fixed rate mortgages usually have terms lasting 15 or 30 years. Throughout those years, the interest rate and monthly payments remain the same.  You would select this type of loan when you:

• Plan to live in home more than 7 years
• Like the stability of a fixed principal/interest payment
• Don't want to run the risk of future monthly payment increases
• Think your income and spending will stay the same

2) Adjustable Rate Mortgage

Adjustable Rate Mortgages (often called ARMs) typically last for 15 or 30 years, just like fixed rate mortgages. But during those years, the interest rate on the loan may go up or down. Monthly payments increase or decrease.  You would select this type of loan when you:

• Plan to stay in your home less than 5 years
• Don't mind having your monthly payment periodically change (up or down)
• Comfortable with the risk of possible payment increases in future
• Think your income will probably increase in the future

By carefully considering the above factors and seeking our professional advice, you should be able to select the one loan that matches your present condition as well as your future financial goals.